Expanding internationally is becoming a high priority for many online retailers. According to Forrester, consumers in Western Europe spent €26 billion on cross-border trade (CBT) in 2014, representing 17% of e-commerce sales in that region. What’s more, online CBT sales in Western Europe are predicted to grow at a rate of 11% over the next five years. So how can retailers get in on this action?
At our recent Catalyst EU event, Hakan Thyr, ChannelAdvisor’s director of partnerships, EMEA, shared 10 tips for retailers looking to expand internationally. We’re recapping those tips in this two-part blog series. If you missed the first five tips, you can catch up here.
- Consider Additional Labour Costs
Before deciding to expand to new markets abroad, you’ll need to be aware of additional cost constraints. These could include outsourcing tasks like fulfilment, customer service and translation to third parties. Make sure your prices are competitive and that your products are attractive enough to mitigate the increased expense.
- Consider Fulfilment Issues
Pack items with additional protection if necessary and keep package dimensions to a minimum. Don’t list your bulkiest products to far-away regions without considering the costs and logistics of delivering them there. Avoid selling fragile items or products in restricted categories. And because items will go missing occasionally, consider tracking them. Watch out for long-term storage costs if you need to store inventory abroad, and build fulfilment costs into your product prices. Programmes such as Fulfilment by Amazon and eBay’s Global Shipping Programme are useful if you want support with the fulfilment aspect of CBT.
- Consider CBT Marketplaces in Emerging Markets
Many marketplaces have expanded globally, moving away from operating only in their local regions. Amazon and eBay, for example, each have large networks of global marketplaces. By listing on international marketplaces, you have the chance to get your items in front of local audiences worldwide, easily and cheaply, by taking advantage of their checkout and fulfilment processes, as well as their existing brand credibility.
Also consider country-specific marketplaces like Trade Me. With 3.6 million members in a country of just 4 million, Trade Me is a lucrative marketplace to use to enter the New Zealand market. As you’re listing on international marketplaces, think about selling items that aren’t readily available in other countries, such as car parts for car enthusiasts in New Zealand.
Other marketplaces to consider are Tmall, the largest marketplace in China (which accounts for 46.7% of China’s B2C online retail market), or MercadoLibre, which is partly owned by eBay and performing well in Latin America.
- Fulfil via Amazon Programs
Amazon offer programmes to help retailers sell internationally and expand into new markets. Fulfilment by Amazon (FBA) allows you to easily reach new customers abroad, since Amazon packs and ships your products for you. Amazon also takes on customer service and returns, mitigating the shipping and tax implications of adding a new sales channel. Amazon’s Fulfilment by Merchant (FBM) allows you to manage your inventory yourself so the margins will be higher, but you’ll need to take on the onus of customer service yourself. Use ChannelAdvisor’s business rules to toggle between FBA and FBM pricing.
- Use Passive CBT Sales Data and Research Trends
Passive CBT involves listing products on local marketplaces and offering to sell internationally to consumers navigating your domestic website from abroad. If you have limited resources, this is a great way to test demand without having to localise content. It’s also a good technique for retailers that want to test out the CBT waters, since it allows you to start slowly with shipping, returns and customer service demands. Take a look at your current sales and analytics today to see if there are any ‘hot spots’ you’re receiving traffic and orders from. Additionally, spend time researching your vertical in other markets to identify where there might be an appetite for your products. All this data can be combined to plan out a road map of where you should consider expanding to, and in what order.
We hope you found these tips useful. When it comes to CBT, the takeaway is to start small, learn and adapt. Remain flexible and identify challenges to overcome before you get in any deeper.
Best of luck with your e-commerce journey! For more in-depth information about CBT, download our Globetrotter’s Guide to International Expansion.